Stelco asked to finalize loan terms, reorganize corporate structure before plan implementation

By Caroline Salls

Pittsburgh, Jan. 19 - Stelco Inc. said the Ontario Superior Court of Justice asked the company to finalize the terms of C$975 million in loans and reorganize its corporate structure in connection with implementation of its proposed restructuring plan.

According to a company news release, the court wants Stelco to finalize the terms of its C$600 million asset based loan and C$375 million Tricap bridge loan facility.

The company has agreed to deliver signed term sheets to the court-appointed monitor by 5 p.m. Friday.

The court also expressed concern over the reorganization of the company's corporate structure. As a result, the three new equity sponsors have identified the structure they wish to have in place.

In addition, as a condition of Stelco's financing from Tricap, Tricap must be satisfied with the company's financial and corporate structure as a condition of its participation in the restructuring plan.

Under the new corporate structure, Stelco would primarily serve as a holding company, with the operating businesses and assets transferred into newly created limited partnerships.

Tricap said it believes that this structure will provide Stelco with greater flexibility in meeting its future financing needs at a lower cost.

Also under the proposed structure, Stelco will continue to be responsible for all employment-related obligations, including pension plans.

The reorganization is also subject to the approval of Stelco's board of directors.

Stelco, a Hamilton, Ont.-based steel company, filed for bankruptcy under the Companies Creditors' Arrangement Act on Jan. 29, 2004.

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